Blogging and Writing Full-Time: Financial Changes to Come

Over a year ago when I finally allowed myself to “stand in my truth” as Suze says, I told my husband what I had been secretly chewing over for months. Admitting my desire to pursue writing full-time lifted a huge wave of anxiety off of me, and the knot that I typically keep in the muscles under my ribcage released. I could feel Paul’s excitement; he told me that he figured the only reason I was still at my 9-5 was because I was in love with it, and that I should immediately give my two weeks’ notice. What unconditional, beautiful support!

Since then we have had many conversations about the various aspects of self-employment. Being a writer, surviving by my pen, digging into the depths of myself and seeking answers to a list of unending questions is something I have wanted to do since second grade. I just didn’t think that it would ever be possible, or that my partner would be so supportive of me. Inadequate finances ensure that a lot of dreams never see the light of day, and I am certainly not immune to the necessity of bringing home a paycheck. So what has made my attempt at self-employment possible?

Giving Ourselves a Fighting Chance

Paul and I paid off our combined $25,000 in non-mortgage debts in 2010 (student loans, car loan, engagement ring) which added an additional $950 to our monthly cash flow. Over the last three years we diligently saved between 29-40% of our post-tax income and have a fully funded eight month emergency fund. We have also worked hard to pare down our monthly expenses by doing such things as paying cash for my beater car, preparing most dinners and lunches from home, using free resources to cover some of our entertainment costs and “extras”, etc. We will still have one steady income in the household, and it can just about cover our monthly expenses and retirement savings. And finally, I have built up my website working 30+ hours every week for the last three and a half years.

Financial Challenges Ahead

Still, we are certainly looking at some financial challenges moving forward. Here’s how our finances will change in the coming months:

Saying Goodbye to My Pension: This was the biggest financial hurdle in discussions with my husband on whether or not to quit my job. My heart sank when I called our pension office and found out how much per month in retirement I would receive if I stayed until 5 years (minimum for being vested). I thought it would be more than the estimated $363.46 per month. This is not a market-based pension, but rather is based on salary and longevity. While I will be giving up a risk-free monthly $363.46 check in retirement (starting at around the age of 65), I will be able to roll my contributions (6.45% of e3ach paycheck) and interest earned over the last four years into my Roth IRA where it will be invested for the next 30-35 years.

Taking a Cut in Household Income: I do not wish to share what my income was, but since I was working for the state you can assume I don’t have too far to fall. Throughout this process I made the realization that over four years, three merit increases, one promotion, and with receiving my Senior Investigator certification, my pay has only increased by $257 per month. This was not encouraging for me. Still, losing one income in the short-term is certainly going to hurt a bit.

Adding to Our Monthly Expenses: Two areas where we know our expenses will increase are health insurance and electricity (since I will be home during most days). We estimate that it will cost us approximately $130 per month to insure me through Paul’s employer. It should be noted that our monthly expenses for gasoline and car insurance on my car should decrease.

I am not one for taking chances with finances, so this is truly a leap of faith for me. I am so thrilled and exhilarated at this once-in-a-lifetime opportunity. At the same time I feel a bit vulnerable and hope to not get lost in the unstructured freedom. Even so, we have safety nets in place and are open to the possibility of either success or failure. If worse comes to worse, I am well-trained in a field I am passionate about and have secured some great references. So, bring it on!

Are you self-employed, or have you thought about becoming so? What are the issues you have dealt with? Ultimately, what stops you from becoming self-employed?